In 2019, Simon Rosenberg founded Homestead Financial Partners with a vision to help families reduce fees, simplify investments, and increase after tax cash flow using professionally managed separate accounts. Homestead builds portfolios on low-cost discount brokerage platforms leveraging digital technologies, institutional research tools, and more than a decade of experience in value investing spanning equities, fixed income, real estate, and alternatives. The firm specializes in income-oriented investing using concentrated portfolios of publicly traded securities.
Income investing is as old as the modern stock market itself. In his seminal work on value investing, “The Theory of Investment Value”, John Burr Williams distinguishes between speculation and investment. A speculator looks to buy low and sell high, normally with abbreviated holding periods, seeking to profit from short term movements in share prices. An investor, on the other hand, is a discriminating buyer who considers underlying free cash flow and yield as yardsticks by which to measure value. In today’s environment of ultra-low interest rates, central bank intervention, passive investing, and inflated valuations, the wise council of value investors like J.B Williams and Benjamin Graham is more important than it ever has been.
An income-oriented approach to investing offers the following benefits:
- Income paying securities tend to exhibit lower levels of volatility because cash flows anchor market values. This is true for fixed income securities but also holds true for equities, real estate, and other investments.
- Companies that commit to return capital to shareholders through market cycles generally have more resilient business models and a disciplined approach to capital allocation.
- Focusing on income and fundamental valuation steers investors away from emotional and unproductive behaviors such as speculation and market timing.
Homestead offers access to affordable and customized separately managed accounts designed to produce steady, diversified, and growing streams of income for our clients.